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5.0 Telecommunications

5.2 Local & access and long distance

Overview

Local & access²²⁵ and long distance revenues were $13.5 billion in 2008, with $9.3 billion from local & access revenues and $4.2 billion from long distance²²⁶ revenues. There were over 100 local & access service providers and over 150 long distance service providers. These providers included

• large incumbent TSPs, who provide both local and long distance services, primarily over their own networks;
• small incumbent TSPs, who operate in limited areas of Ontario, Quebec, and British Columbia, and include municipally owned, and public and privately held carriers;
• cable BDUs, who provide network based local and long distance services; and
• resellers, who do not own their own telecommunications facilities and tend to concentrate on the long distance market by offering dial-around or prepaid card services.

Highlights

• The number of local & access lines increased 0.1% from 20.93 million in 2007 to 20.95 million in 2008.
• Local & access and long distance revenues (excluding contribution) declined 0.8% from $13.6 billion in 2007 to $13.5 billion in 2008:

i. local & access revenues increased 0.2% from $9.32 billion in 2007 to $9.34 billion in 2008; and
ii. long distance revenues declined 3.1% from $4.3 billion in 2007 to $4.2 billion in 2008.

• Incumbent TSPs' share of local & access and long distance revenues (excluding out of territory) decreased from 78% in 2007 to 76% in 2008:

i. their local & access revenue market share decreased from 85.2% in 2007 to 82.1% in 2008; and
ii. their long distance revenue market share decreased from 61.8% in 2007 to 61.2% in 2008.

• Residential average monthly local and long distance revenue per line decreased $0.47 from $45.72 in 2007 to $45.25 in 2008, and business average monthly local and long distance revenue per line decreased by $1.80 from $64.56 in 2007 to $62.76 in 2008.

Description of services

Local & access

The local & access sector is comprised of wireline services relating to access and connectivity to the PSTN and includes services used by both retail and wholesale customers.

Local wireline telephone service allows a customer to place unlimited calls within a defined local-calling area for a basic monthly fee. Local service is either access-dependent or access-independent. Access-dependent telephone services include managed wireline access from the TSP to the customer, a connection to the PSTN, and a telephone number. Access-independent telephone services do not include the managed wireline access component. In addition, customers of access-independent telephone services must also have broadband Internet service which serves as the access component.

Local service also includes automated call answering services, business Centrex, Integrated Services Digital Network (ISDN) services, and other ancillary services such as inside wiring, installation and repair, teleconferencing, and miscellaneous local services.

Local & access revenues includes the sale of local services on a wholesale basis and, with the introduction of local competition, has included revenues from access service for interconnection between carriers and other service providers, including switching and aggregation, and unbundled network components.

Long distance

Retail long distance service encompasses wireline voice traffic to locations outside of the local service calling area. Long distance services are sold in a variety of ways such as a standard per minute charge, a monthly subscription plan, calling cards, or as part of a bundle with other services.

Wholesale long distance service refers to services provided under connection arrangements between facilities based carriers to transit traffic on behalf of other service providers, as well as the sale of wholesale bulk minutes to resellers of long distance services.

Sector analysis

Local & access and long distance

Local & access and long distance revenues continued their downward trend, declining 0.8% in 2008 from $13.6 billion in 2007 to $13.5 billion. Local & access revenues increased 0.2% in 2008 from $9.32 billion to $9.34 billion, and long distance revenues declined 3.1% from $4.3 billion in 2007 to $4.2 billion in 2008.

Residential average monthly local and long distance revenue per line decreased from $45.72 in 2007 to $45.25 in 2008, mainly due to a decline in long distance revenues which, on a per-line basis, decreased $0.56 per line to $13.94 in 2008. While $45.25 per line represents the average, across all competitors, average monthly local and long distance residential revenue per line for the large incumbent TSPs was $44.18 in 2008, as compared to $36.03 for the large cable BDUs.

Business average monthly local and long distance revenue per line decreased from $64.56 in 2007 to $62.76 in 2008, mainly due to the decrease in long distance revenues which, on a per-line basis, declined from $17.18 per line in 2007 to $15.80 in 2008. Local business revenue per line decreased $0.41 to $46.97.

Local & access segment

Local forbearance

As of 30 June 2009, the Commission forbore from regulating local exchanges representing 77% of all residential lines and 68% of all business lines in Canada. Appendix 4 to this report provides the status of local forbearance by exchange.

Facilities: owned, leased, and resold

In 2008, approximately 73% of the alternative TSP provided retail lines were provisioned by owned facilities and 18% by leased facilities. Within the residential segment, 87% of alternative TSP provided local residential lines were provisioned via owned facilities compared to 26% in the business segment.

In terms of revenue, the incumbent TSPs' share of local & access revenues declined from 85.2% in 2007 to 82.1% in 2008, in part due to increased competition from cable BDUs as they continued to make market-share gains, particularly in the local residential market.

The number of residential cable BDU lines increased from 2.3 million in 2007 to 2.9 million in 2008. The cable BDUs' share of residential lines increased from 17.9% in 2007 to 22.5% in 2008, as well as their share of revenues which increased from 13.6% in 2007 to 18.6% in 2008.

The number of access-independent VoIP lines decreased from 161,000 in 2007 to 153,000 in 2008, accounting for 0.8% of local lines in 2008.

In 2008, the incumbent TSPs accounted for 78.1% of lines across all provinces, compared to 81.2% in 2007. The percentage of residential lines held by the incumbent TSPs declined in 2008, both provincially and by major centre.

Long distance segment

Long distance revenues continued to decline while minutes remained relatively stable. Incumbent TSPs' long distance revenues dropped from $2.7 billion in 2007 to $2.6 billion in 2008. The cable BDUs posted the most significant increase in long distance revenues, with residential long distance revenues increasing by 16.8% in 2008 to $226 million.

Declining long distance revenues and increasing long distance minutes over the 2004 to 2008 period have resulted in declining average revenue per minute (ARPM). Most recently in 2008, ARPM dropped from $0.088 in 2007 to $0.083 in 2008 for residential and from $0.058 to $0.051 for business.

Statistical Information - Local & access and long distance

Table 5.2.1 Local & access and long distance revenues, local lines, and long distance minutes

										CAGR
	2004		2005		2006		2007		2008	2004 - 2008
Total local & access revenues ($ millions)	9,695		9,762		9,618		9,544	#	9,550	-0.4%
Annual Growth	0.0%		0.7%		-1.5%		-0.8%		0.1%
Less: Contribution revenues ($ millions)	240		251		238		219		209	-3.4%
Local & access service revenues ($ millions)	9,455		9,511		9,380		9,324	#	9,342	-0.3%
Annual Growth	0.0%		0.6%		-1.4%		-0.6%		0.2%
Long distance revenues ($ millions)	5,711		5,109		4,742		4,318	#	4,185	-7.5%
Annual Growth	-5.8%		-10.5%		-7.2%		-8.9%		-3.1%
Local & access and long distance revenues ($ millions)	15,166		14,620		14,122		13,642	#	13,527	-2.8%
Annual Growth	-2.3%		-3.6%		-3.4%		-3.4%		-0.8%
Local lines (thousands)	20,563		20,780		21,000		20,926	#	20,947	0.5%
Annual Growth	-0.2%		1.1%		1.1%		-0.4%		0.1%
Long distance minutes (millions)	60,619		66,696		71,998		72,345	#	73,015	4.8%
Annual Growth	6.0%		10.0%		7.9%		0.5%		0.9%

Source: CRTC data collection

Table 5.2.2 Local & access and long distance revenues, by service category ($ millions)

								CAGR
	2005		2006		2007		2008	2005 - 2008
Local
Residential	5,086		4,947		4,847	#	4,869	-1.4%
Annual Growth	-0.3%		-2.7%		-2.0%		0.5%
Business	3,472		3,514		3,581	#	3,552	0.8%
Annual Growth	2.1%		1.2%		1.9%		-0.8%
Subtotal retail	8,558		8,461		8,428	#	8,421	-0.5%
Annual Growth	0.7%		-1.1%		-0.4%		-0.1%
Wholesale	828		827		814	#	851	0.9%
Annual Growth	0.7%		-0.1%		-1.6%		4.6%
Total local	9,386		9,288		9,242	#	9,272	-0.4%
Annual Growth	0.7%		-1.0%		-0.5%		0.3%
Long Distance
Residential	2,648		2,411		2,251	#	2,168	-6.5%
Annual Growth	-9.4%		-9.0%		-6.6%		-3.7%
Business	1,550		1,464		1,299	#	1,195	-8.3%
Annual Growth	-13.4%		-5.5%		-11.3%		-8.0%
Subtotal retail	4,198		3,875		3,550	#	3,362	-7.1%
Annual Growth	-10.9%		-7.7%		-8.4%		-5.3%
Wholesale	911		867		768		823	-3.3%
Annual Growth	-8.8%		-4.8%		-11.4%		7.1%
Total long distance	5,109		4,742		4,318	#	4,185	-6.4%
Annual Growth	-10.5%		-7.2%		-8.9%		-3.1%
Local and long distance
Residential	7,734		7,358		7,098	#	7,037	-3.1%
Annual Growth	-3.6%		-4.9%		-3.5%		-0.9%
Business	5,022		4,978		4,880	#	4,747	-1.9%
Annual Growth	-3.3%		-0.9%		-2.0%		-2.7%
Subtotal retail	12,756		12,336		11,978	#	11,783	-2.6%
Annual Growth	-3.5%		-3.3%		-2.9%		-1.6%
Wholesale	1,739		1,694		1,582	#	1,674	-1.3%
Annual Growth	-4.5%		-2.6%		-6.6%		5.8%
Total	14,495		14,030		13,560	#	13,547	-2.4%
Annual Growth	-3.6%		-3.2%		-3.4%		-0.8%

Source: CRTC data collection

Table 5.2.3 Local & access revenues, by type of TSP ($ millions)

								CAGR
	2005		2006		2007		2008	2005 - 2008
Residential
Incumbent TSPs (excluding out-of-territory)	4,837		4,457		4,096		3,827	-7.5%
Annual Growth	-2.4%		-7.9%		-8.1%		-6.6%
Incumbent TSPs (out-of-territory)	3		5		6		10	47.1%
Annual Growth	50.0%		66.7%		12.7%		69.4%
Non-incumbent, alternative TSPs	246		485		745	#	1,033	61.3%
Annual Growth	73.2%		97.2%		53.6%		38.6%
Total residential	5,086		4,947		4,847	#	4,869	-1.4%
Annual Growth	-0.3%		-2.7%		-2.0%		0.5%
Business
Incumbent TSPs (excluding out-of-territory)	2,998		3,023		3,114		3,096	1.1%
Annual Growth	0.1%		0.8%		3.0%		-0.6%
Incumbent TSPs (out-of-territory)	316		313		323		309	-0.7%
Annual Growth	6.0%		-0.9%		3.2%		-4.3%
Non-incumbent, alternative TSPs	158		178		144	#	147	-2.4%
Annual Growth	46.3%		12.7%		-19.0%		2.0%
Total business	3,472		3,514		3,581	#	3,552	0.8%
Annual Growth	2.1%		1.2%		1.9%		-0.8%
Retail
Incumbent TSPs (excluding out-of-territory)	7,835		7,480		7,210		6,923	-4.0%
Annual Growth	-1.5%		-4.5%		-3.6%		-4.0%
Incumbent TSPs (out-of-territory)	319		318		329		319	0.0%
Annual Growth	6.3%		-0.3%		3.4%		-5.4%
Non-incumbent, alternative TSPs	404		663		889	#	1,180	42.9%
Annual Growth	61.6%		64.1%		34.1%		32.7%
Total retail	8,558		8,461		8,428	#	8,421	-0.2%
Annual Growth	0.7%		-1.1%		-0.4%		-0.1%
Wholesale
Incumbent TSPs (excluding out-of-territory)	698		667		664		686	-0.6%
Annual Growth	-2.0%		-4.4%		-0.4%		3.2%
Incumbent TSPs (out-of-territory)	104		134		109		114	3.2%
Annual Growth	11.8%		28.8%		-18.3%		4.3%
Non-incumbent, alternative TSPs	26		26		40	#	51	25.2%
Annual Growth	52.9%		0.0%		54.4%		27.2%
Total wholesale	828		827		814	#	851	0.9%
Annual Growth	0.7%		-0.1%		-1.6%		4.6%
Total
Incumbent TSPs (excluding out-of-territory)	8,533		8,147		7,874		7,609	-3.7%
Annual Growth	-1.5%		-4.5%		-3.3%		-3.4%
Incumbent TSPs (out-of-territory)	423		452		438		433	0.8%
Annual Growth	7.6%		6.9%		-3.0%		-1.2%
Non-incumbent, alternative TSPs	430		689		929	#	1,231	42.0%
Annual Growth	61.0%		60.2%		34.9%		32.4%
Total revenues	9,386		9,288		9,242	#	9,272	-0.4%
Annual Growth	0.7%		-1.0%		-0.5%		0.3%

Source: CRTC data collection

Table 5.2.4 Local lines, by type of TSP (thousands)

								CAGR
	2005		2006		2007		2008	2005 - 2008
Residential
Incumbent TSPs (excluding out-of-territory)	11,924		11,104		10,356		9,541	-5.4%
Annual Growth	-4.3%		-6.9%		-6.7%		-7.9%
Incumbent TSPs (out-of-territory)	13		21		26		27	20.2%
Annual Growth	30.0%		61.5%		25.4%		2.9%
Non-incumbent, alternative TSPs	963		1,825		2,544	#	3,422	37.3%
Annual Growth	130.4%		89.5%		39.4%		34.5%
Total residential	12,900		12,950		12,927	#	12,990	0.2%
Annual Growth	0.1%		0.4%		-0.2%		0.5%
Business
Incumbent TSPs (excluding out-of-territory)	5,336		5,264		5,252		5,268	-0.3%
Annual Growth	-0.7%		-1.3%		-0.2%		0.3%
Incumbent TSPs (out-of-territory)	573		614		640		617	1.9%
Annual Growth	5.7%		7.2%		4.2%		-3.6%
Non-incumbent, alternative TSPs	315		390		438	#	390	5.5%
Annual Growth	19.3%		23.8%		12.4%		-11.1%
Total business	6,224		6,268		6,330	#	6,274	0.2%
Annual Growth	0.7%		0.7%		1.0%		-0.9%
Retail
Incumbent TSPs (excluding out-of-territory)	17,260		16,368		15,608		14,808	-3.8%
Annual Growth	-3.2%		-5.2%		-4.6%		-5.1%
Incumbent TSPs (out-of-territory)	586		635		666		644	2.4%
Annual Growth	6.2%		8.4%		4.9%		-3.3%
Non-incumbent, alternative TSPs	1,278		2,215		2,983	#	3,812	31.4%
Annual Growth	87.4%		73.3%		34.7%		27.8%
Total retail	19,124		19,218		19,257	#	19,264	0.2%
Annual Growth	0.3%		0.5%		0.2%		0.0%
Wholesale
Incumbent TSPs (excluding out-of-territory)	458		451		551		623	8.0%
Annual Growth	-2.1%		-1.5%		22.1%		13.2%
Incumbent TSPs (out-of-territory)	303		470		405		405	7.5%
Annual Growth	134.9%		55.1%		-13.9%		0.0%
Non-incumbent, alternative TSPs	41		48		84	#	97	24.1%
Annual Growth	20.6%		17.1%		75.6%		15.4%
Total wholesale	802		969		1,040	#	982	5.2%
Annual Growth	27.1%		20.8%		7.3%		-5.5%
Total
Incumbent TSPs (excluding out-of-territory)	17,718		16,819		16,159		15,432	-3.4%
Annual Growth	-3.2%		-5.1%		-3.9%		-4.5%
Incumbent TSPs (out-of-territory)	889		1,105		1,071		906	0.5%
Annual Growth	30.5%		24.3%		-3.1%		-15.4%
Non-incumbent, alternative TSPs	1,319		2,263		3,067	#	3,909	31.2%
Annual Growth	84.2%		71.6%		35.5%		27.5%
Total lines	19,926		20,187		20,297	#	20,246	0.4%
Annual Growth	1.1%		1.3%		0.5%		-0.2%

Source: CRTC data collection

Table 5.2.5 Incumbent TSP provincial retail local market share, by line

Province	2006	2007	2008
British Columbia	88.0%	85.0%	80.1%
Alberta	82.3%	79.4%	76.4%
Saskatchewan	99.5%	97.9%	95.9%
Manitoba	92.1%	91.7%	89.7%
Ontario	83.5%	78.9%	77.4%
Quebec	84.6%	78.6%	72.5%
New Brunswick	96.6%	94.2%	92.9%
Nova Scotia	78.9%	75.4%	73.8%
Prince Edward Island	85.1%	84.5%	82.5%
Newfoundland & Labrador	96.1%	92.7%	91.8%
All provinces	85.4%	81.2%	78.1%

Source: CRTC data collection

Table 5.2.6 Incumbent TSP residential and business local market share, by line for major centres²²⁷

Province	Major centre	Residential lines			Business lines
		2007	2008		2007	2008
British Columbia	Vancouver	79.8%	72.4%		74.4%	75.3%
	Victoria	74.8%	66.0%		85.5%	83.5%
Alberta	Calgary	68.5%	62.6%		72.7%	71.7%
	Edmonton	77.4%	71.2%		73.4%	74.8%
Saskatchewan	Saskatoon	90.6%	87.3%		99.6%	99.0%
	Regina	95.8%	88.8%		99.7%	99.5%
Manitoba	Winnipeg	79.7%	75.5%		99.0%	98.6%
Ontario	Toronto	69.2%	66.2%		76.2%	79.5%
	Ottawa-Gatineau	74.7%	69.4%		90.0%	90.9%
	Hamilton	72.3%	67.7%		83.8%	85.8%
	London	71.6%	68.0%		80.3%	80.7%
	Kitchener-Waterloo	72.4%	67.3%		78.8%	79.3%
	St. Catharines-Niagara	82.4%	78.0%		82.5%	86.8%
	Windsor	83.7%	81.3%		77.9%	79.1%
	Oshawa	65.3%	64.8%		86.5%	89.2%
Quebec	Montréal	67.2%	61.5%		80.8%	76.6%
	Québec	70.1%	60.6%		82.2%	74.4%
New Brunswick	Fredericton	84.5%	81.6%		99.6%	99.6%
Nova Scotia	Halifax	56.8%	54.0%		78.6%	81.8%
Prince Edward Island	Charlottetown	66.2%	63.7%		88.3%	89.5%
Newfoundland & Labrador	St. John's	94.0%	89.1%		70.4%	78.4%

Source: CRTC data collection

Table 5.2.7 Local wholesale revenues, by major component ($ millions)

										CAGR
	2004		2005		2006		2007		2008	2004 - 2008
Interconnection	333		322		293		273		281	-4.2%
Centrex	123		107		106		104		97	-5.7%
PSTN access	219		237		256		261		280	6.3%
Unbundled loops	84		110		119		120		116	8.4%
Other revenues	62		53		53		45		47	-6.7%
Total	822		829		827		802		821	0.0%

Source: CRTC data collection

Figure 5.2.1 Alternative TSP local retail lines, by type of facility

Source: CRTC data collection

Figure 5.2.2 Alternative TSP local residential and business lines, by type of facility (2008)

Figure 5.2.3 Large incumbent TSP pay telephone quantities and retail revenue per payphone

Table 5.2.8 Long distance revenues, by type of TSP ($ millions)

								CAGR
	2005		2006		2007		2008	2005 - 2008
Residential
Incumbent TSPs (excluding out-of-territory)	1,922		1,655		1,505	#	1,442	-9.1%
Annual Growth	-10.0%		-13.9%		-9.0%		-4.2%
Incumbent TSPs (out-of-territory)	6		5		5		3	-24.1%
Annual Growth	200.0%		-16.7%		-0.2%		-47.5%
Non-incumbent, alternative TSPs	720		751		741	#	723	0.1%
Annual Growth	-8.3%		4.3%		-1.3%		-2.4%
Total residential	2,648		2,411		2,251	#	2,168	-6.5%
Annual Growth	-9.4%		-9.0%		-6.6%		-3.7%
Business
Incumbent TSPs (excluding out-of-territory)	873		812		750	#	700	-7.1%
Annual Growth	-18.2%		-7.0%		-7.6%		-6.6%
Incumbent TSPs (out-of-territory)	295		240		212		176	-15.9%
Annual Growth	-11.1%		-18.6%		-11.6%		-17.2%
Non-incumbent, alternative TSPs	382		412		337	#	319	-5.9%
Annual Growth	-2.1%		7.9%		-18.3%		-5.3%
Total business	1,550		1,464		1,299	#	1,195	-8.3%
Annual Growth	-13.4%		-5.5%		-11.3%		-8.0%
Retail
Incumbent TSPs (excluding out-of-territory)	2,795		2,467		2,255	#	2,142	-8.5%
Annual Growth	-12.7%		-11.7%		-8.6%		-5.0%
Incumbent TSPs (out-of-territory)	301		245		217		178	-16.0%
Annual Growth	-9.9%		-18.6%		-11.4%		-17.9%
Non-incumbent, alternative TSPs	1,102		1,163		1,078	#	1,042	-1.9%
Annual Growth	-6.2%		5.5%		-7.3%		-3.3%
Total retail	4,198		3,875		3,550	#	3,362	-7.1%
Annual Growth	-10.9%		-7.7%		-8.4%		-5.3%
Wholesale
Incumbent TSPs (excluding out-of-territory)	469		400		414		420	-3.6%
Annual Growth	-11.5%		-14.7%		3.6%		1.4%
Incumbent TSPs (out-of-territory)	270		270		217		262	-1.0%
Annual Growth	0.0%		0.0%		-19.7%		20.9%
Non-incumbent, alternative TSPs	172		197		137		140	-6.5%
Annual Growth	-13.6%		14.5%		-30.6%		2.7%
Total wholesale	911		867		768		823	-3.3%
Annual Growth	-8.8%		-4.8%		-11.4%		7.1%
Total
Incumbent TSPs (excluding out-of-territory)	3,264		2,867		2,670	#	2,563	-7.7%
Annual Growth	-12.5%		-12.2%		-6.9%		-4.0%
Incumbent TSPs (out-of-territory)	571		515		434		440	-8.3%
Annual Growth	-5.5%		-9.8%		-15.7%		1.4%
Non-incumbent, alternative TSPs	1,274		1,360		1,214	#	1,182	-2.5%
Annual Growth	-7.3%		6.8%		-10.7%		-2.6%
Total revenues	5,109		4,742		4,318	#	4,185	-6.4%
Annual Growth	-10.5%		-7.2%		-8.9%		-3.1%

Source: CRTC data collection

Table 5.2.9 Large incumbent TSPs' retail long distance revenue market share, by region

Region	Percent
	2004		2005		2006		2007		2008
B.C., Alberta	69		68		66		75		73
Saskatchewan	84		84		79		86		85
Manitoba	84		86		84		88		83
Ontario, Quebec	65		61		57		55		56
Atlantic	78		77		79		82		81

Source: CRTC data collection

Figure 5.2.4 Local business market revenue distribution, by customer size and type of provider (2008)

Figure 5.2.5 Long distance business market revenue distribution, by customer size and type of provider (2008)